Uber’s $1 Trillion Opportunity

As I have written before, autonomy is not only a way to potentially add supply to $Uber(UBER)$ ’s business, it’s a way to lower costs and expand the addressable market. Uber put the opportunity at over $1 trillion in the U.S. alone.

Notice that this is a progression of market expansions Uber has been taking on for years. It’s just the biggest and most transformative we’ve ever seen.

The key to Uber winning autonomy is not developing technology, but rather making sure no one supplier is too powerful. Uber wants autonomy to be a commodity with many winners, none of whom is able to build the scale to replace Uber’s network. Here are the leaders they pointed out in a presentation to investors.

$Alphabet(GOOG)$ $Alphabet(GOOGL)$ Waymo is already on the Uber network in a few cities, but imagine if May Mobility, Zoox, Nuro, and Mobileye (VW and others) joined the fray.

This could increase supply and allow innovation in vehicles and business models. All of this would help lower the cost per ride, potentially from between $2 and $3 per mile today to under $1 in the future. But no one company would be a threat to Uber itself.

This is the vision. It’s what I wrote about in the Uber (and $Lyft, Inc.(LYFT)$ ) spotlight and it’s what management is talking about.

Uber’s results were great, but the fact that they’re advertising to potential suppliers (and I think that’s what this presentation was about) that they’re opening for business and want to help push autonomy forward is the best news for investors.

It looks more likely that autonomy will be a commodity and Uber/Lyft will remain in a great strategic position long-term. That’s great for Uber’s business long-term and in the meantime management is performing about as well as anyone could hope.

The future looks bright for Uber and I welcome Bill Ackman to the bullish side of the investment thesis.